Wake Forest Spins Off Endowment Office as OCIO Shop

(May 8, 2014) – Wake Forest University has spun off its endowment investment office into an outsourced-CIO (OCIO) operation, the school’s President Nathan Hatch confirmed to aiCIO.

Verger Capital Management will continue to invest the university’s $1 billion endowment, Hatch said, which includes assets from Wake Forest Baptist Medical Center and the school-affiliated Reynolda House Museum of American Art.

It has also landed a private school as its first client, according to a source familiar with the situation.

The new firm is a jointly-owned venture between the endowment’s management team and the Winston-Salem, North Carolina-based university.

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Jim Dunn will continue to serve as CIO and also take the title of Verger’s CEO. Dunn has led the endowment since 2009. Prior to that, he served as CIO and managing director of Wilshire Associates in Santa Monica, California.

The firm’s board includes some members affiliated with the university, and the operation has been approved by Wake Forest’s board of trustees.

OCIO clients would gain access to the risk-oriented investment strategy that has been in place at Wake Forest for several years.

“Because we’re benchmark agnostic and use a factor-based asset allocation model, we don’t have traditional asset class ‘buckets’ to fill,” Dunn, a leading proponent of risk-factor models, told aiCIO in 2013. “We are able to be creative and opportunistic in our investment choices. One example is that of a global real asset manager who reached out to us regarding a large, distressed agricultural co-investment in Australia. The deal does not fall neatly into any bucket. The transaction required a quick analysis and turnaround—something we are able to do given our experience in the sector and our focus on factor exposures as opposed to asset classes.”

Verger will continue to operate out of Wake Forest’s Winston-Salem campus.

(May 8, 2014) — Investment managers looking to target growing institutional asset piles in burgeoning Asia-Pacific economies may be left disappointed, a white paper published this week has claimed.

Casey, Quirk & Associates said large investors, including sovereign wealth funds and other government-backed entities, were bringing their investment capabilities in-house, leaving fewer assets available for third-party managers.

The assets are sizeable and lucrative for those able to win them from their owners.

“Professionally managed investment assets in the Asia-Pacific region will surpass $14 trillion by yearend 2018—from $10 trillion in 2014—and produce $66 billion in fee revenue for asset managers worldwide over the next five years,” the consultants’ paper said.

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Australia, Japan, and mainland China will represent two-thirds of the total revenue opportunity through 2018, followed by South Korea, Hong Kong, Singapore, Taiwan, and India, according to Casey Quirk. Of the $66 billion revenue total, those eight markets will represent a $51.4 billion opportunity from manager turnover, while $10.9 billion is projected to come from net new flows.

Asset managers who are native to the region will have to go on the defensive and adopt new strategies to keep up with increasingly sophisticated investor portfolios, the consultants said. Managers from outside the region, who may already operate these strategies, will have to adapt too, however.

“Global asset managers may have the edge currently on managing strategies that are increasingly in demand, but to be successful in the region they will need to adapt their investment and distribution capabilities to fit local needs,” the paper said.